U.S. Department of Labor Employment Standards Administration Davis-Bacon Compliance Principles U.S. Department of Labor Wage and Hour Division

U.S. Department of Labor Wage and Hour Division DBA/DBRA Compliance Principles Laborers and mechanics Site of the work Apprentices Trainees & Helpers Fringe Benefits Federal contracts: PCA interaction with DBA Computing overtime pay

U.S. Department of Labor Wage and Hour Division Laborers and Mechanics Workers whose duties are manual or physical in nature Includes apprentices, trainees, and helpers For CWHSSA, includes watchmen and guards

U.S. Department of Labor Wage and Hour Division Laborers and Mechanics Does not include: Timekeepers, inspectors, architects, engineers Bona fide executive, administrative, and professional employees as defined under FLSA Working foremen are generally non-exempt must be paid the Davis Bacon (DB) rate for the classification of work performed if not 541 exempt

U.S. Department of Labor Wage and Hour Division Site of the Work Davis-Bacon applies only to laborers and mechanics employed “directly on the site of the work”

U.S. Department of Labor Wage and Hour Division Site of the Work Definition “Site of the work” does not include a contractor’s or subcontractor’s permanent home office, branch locations, fabrication plants, tool yards, etc., whose location and continuance in operation are determined without regard to a particular covered project.

U.S. Department of Labor Wage and Hour Division Apprentices Persons individually registered in a bona fide apprenticeship program registered with DOL or a DOL approved State apprenticeship agency Include individuals in their first 90 days of probationary employment as an apprentice DOL regulations: 29 CFR 5.2(n)(1) and 5.5(a)(4)(i)

U.S. Department of Labor Wage and Hour Division Trainees Persons registered and receiving on-the-job training in a construction occupation under a program that has been approved in advance by DOL’s Employment Training Administration (ETA) DOL regulations: 29 CFR 5.2(n)(2) and 5.5(a)(4)(ii)

U.S. Department of Labor Wage and Hour Division Apprentices and Trainees Are laborers and mechanics, but are not listed on the WD Permitted to be used on covered projects and paid less than the journeyman rate when: Individually registered in an approved apprenticeship or training program Paid the percentage of hourly rate required by the apprenticeship or training program

U.S. Department of Labor Wage and Hour Division Apprentices and Trainees Paid the FB’s specified in the approved program, or the full amount of FB’s listed on the WD, if the program is silent; and, Within the allowable ratio specified in the approved program for the number of apprentices or trainees to journeymen

U.S. Department of Labor Wage and Hour Division Helpers May be employed if: Duties are clearly defined and distinct from other classifications on the WD An established prevailing practice in the area, Not employed in an informal training program May be added to WD if all above conditions are met; no WD class performs the work

U.S. Department of Labor Wage and Hour Division Wages & Fringe Benefits DBA: the term “wages” or “prevailing wages” includes: The basic hourly rate (BHR) Contractor contributions irrevocably made to a trustee or third party pursuant to a bona fide fringe benefit ( FB ) fund, plan, or program The rate of costs the contractor reasonably anticipates in providing bona fide FB ’s where certain conditions are met

U.S. Department of Labor Wage and Hour Division Fringe Benefits Under DBA, FB’s are a component “prevailing wage” The WD obligation may be satisfied by: Paying the BHR and FB in cash Contributing payments to a bona fide plan Any combination of the two

U.S. Department of Labor Wage and Hour Division Fringe Benefits Must be paid weekly for all hours worked Cash wages paid in excess of BHR may count to offset or satisfy the FB obligation (unlike under SCA)

U.S. Department of Labor Wage and Hour Division Fringe Benefit Example BHR$10.00 FB $ 1.00 Total prevailing wage$11.00 The contractor may comply by paying: $11.00 in cash wages $10.00 in cash wages plus $1.00 for FB $ 9.00 in cash wages plus $2.00 for FB

U.S. Department of Labor Wage and Hour Division Examples of Fringe Benefits Life Insurance Health Insurance Pension Vacation Holiday Sick Leave

U.S. Department of Labor Wage and Hour Division Funded Fringe Benefit Plans Contractors may take credit (without prior approval from DOL) for bona fide FB fund contributions made to third-party trustees or insurers that: Are irrevocably paid; and, Are made regularly, not less often than quarterly Credit is for payments made for individual workers eligible to participate in the plan, program, or fund

U.S. Department of Labor Wage and Hour Division Unfunded Fringe Benefit Plans Costs for an “unfunded” FB plan count towards WD obligation if specific following are met: Costs reasonably anticipated to provide bona fide FB Pursuant to an enforceable commitment Carried out under a financially responsible plan Has been communicated in writing to affected workers

U.S. Department of Labor Wage and Hour Division Discharging DB Prevailing Wage Obligation If WD requires a prevailing wage of $14.50 ($12.00 BHR plus $2.50 in FB’s), the contractor can comply by paying: $14.50 in cash wages; or $12.00 plus $2.50 in bona fide FB; or $11.00 plus $3.50 in bona fide FBs

U.S. Department of Labor Wage and Hour Division Computing Overtime Pay (CWHSSA Earnings) An employee worked 44 hours as electrician, where WD BHR is $12.00 plus $2.50 in FB’s: 44 hoursX$ 2.50= $ FB’s 44 hoursX$12.00= $ BHR 4 hoursX$12.00/2 = $ OT $662.00

U.S. Department of Labor Wage and Hour Division Overtime Computation where Employee Employed at Two Rates During a workweek an employee works 20 hours as an Electrician at $12.00 BHR plus $2.50 in FB’s and as a Painter for 24 hours at $10.00 BHR plus $3.00 in FB’s. The regular rate for determining the Overtime rate is: 20 X $12.00 = $ (as Electrician) 24 X $10.00 = $ (as Painter) $480.00/44 = $10.91 Overtime due: $10.91 X 1/2 X 4 hours = $21.82

U.S. Department of Labor Wage and Hour Division INTERACTION AMONG GOVERNMENT CONTRACTS LAWS Federal contracts requiring PCA & DBA PCA covered contract has more than incidental amount of construction work DBA applies to construction work Construction includes “construction, alteration and repair, including painting and decorating” See FAR 48 C.F.R. § (b).

U.S. Department of Labor Wage and Hour Division INTERACTION AMONG GOVERNMENT CONTRACTS LAWS Cont. PCA & DBA – Example 1 Contract for supply of security system: Davis-Bacon applies to: Replacement of existing conduit, Laying cable, and Tearing out and replacing walls.

U.S. Department of Labor Wage and Hour Division INTERACTION AMONG GOVERNMENT CONTRACTS LAWS Cont. PCA & DBA – Example 2 Contract for supply and installation of modular furniture DBA applies to: Bolting furniture or fixtures to floors, walls and/or ceilings, Modifying walls, floors and/or ceilings to accommodate shelving, Installing electrical connections for desk area outlets.

U.S. Department of Labor Wage and Hour Division Interaction of Labor Standards Statutes on Federal Government Contracts SCA interaction with DBA & PCA

U.S. Department of Labor Wage and Hour Division SCA or DBA ? General Principles

U.S. Department of Labor Wage and Hour Division Contracts Requiring SCA or DBA SCA does not apply to any contract principally for construction subject to the DBA “Construction” under the DBA includes “construction, alteration, and repair, including painting and decorating”

U.S. Department of Labor Wage and Hour Division SCA Maintenance vs. DBA Repair SCA Maintenance – Work is typically Scheduled, regular and recurring maintenance activities Routine to keep something in state of continuous utilization Examples: custodial service, routine HVAC filter changes, snow removal

U.S. Department of Labor Wage and Hour Division DBA Repair Work Typically covers activities such as restoration of facility One time fix to something not functioning Restoration, alteration or replacement of fixed components Examples: building structural repair, renovation, roof shingling, paving repairs

U.S. Department of Labor Wage and Hour Division Important Considerations for DBA vs. SCA Coverage DBA-covered when activity part of construction contract Performed prior to acceptance by owner Examples of activities: Cleanup Landscaping Carpet laying Drapery installation

U.S. Department of Labor Wage and Hour Division Important Considerations for SCA Coverage SCA-covered when activity is scheduled routine maintenance and upkeep Examples: Replace worn-out carpeting Janitorial work Mowing grass Replace draperies

U.S. Department of Labor Wage and Hour Division DBA or SCA - Demolition Work (29 C.F.R. § 4.116(b)) DBA-covered if subsequent construction of public building or public work is planned at the site as part of same contract or contemplated as part of future construction project SCA-covered if subsequent construction is not contemplated AAM # 90 provides further discussion

U.S. Department of Labor Wage and Hour Division SCA Contracts with DBA Segments

U.S. Department of Labor Wage and Hour Division Contracts Requiring SCA and DBA (29 C.F.R. § 4.116(c)(2)) SCA and DBA both apply to contracts “principally” for services that: Contain specific requirements for substantial amounts of construction, alteration, or repair work Physically or functionally separate from other work called for by the contract

U.S. Department of Labor Wage and Hour Division Contracts Requiring SCA and DBA (29 C.F.R. § 4.116(c)(2)) SCA contracts that require substantial and segregable amounts of construction activity must include the DBA Substantial: the type and quantity of construction work, not merely dollar value Segregable: construction work is physically and functionally separate

U.S. Department of Labor Wage and Hour Division Example: Contract for Food Services includes painting requirements Federal contract for furnishing food services includes requirements to paint cafeteria and kitchen: SCA-covered, as principally to provide food services through the use of service employees Construction activity (i.e., painting) is DBA-covered

U.S. Department of Labor Wage and Hour Division Example: DOD Base Maintenance & Operation Contracts Are principally for services, but often require substantial and segregable construction work: Painting or repainting of base housing Refinishing floors Reroofing buildings If unclear whether SCA/DBA coverage applies to work element, contact contracting officer

U.S. Department of Labor Wage and Hour Division SCA & DBA – Contract Work Orders Questions can arise on whether work required by work order, task order, or service call is: SCA maintenance, or DBA painting/repairs Individual task or work orders are not to be split to avoid DBA coverage

U.S. Department of Labor Wage and Hour Division SCA & DBA – Contract Work Orders DOD guidance (DFARS – 48 C.F.R (d)(1)&(2) If distinction between SCA maintenance & DBA repair (other than painting) is unclear: SCA if service call or order will require less than 32 work hours DBA if 32 or more work hours

U.S. Department of Labor Wage and Hour Division SCA & DBA – Contract Work Orders DOD guidance (DFARS – 48 C.F.R (d)(3) If distinction between SCA maintenance & DBA painting unclear: DBA if 200 square feet or more of painting work is to be performed under a service call or task order Regardless of total work hours

U.S. Department of Labor Wage and Hour Division Coverage Determination SCA/DBA/PCA Contracting agency has initial responsibility for determining coverage DOL has authority for final determination on coverage Final rulings may be appealed to the Administrative Review Board (ARB)

U.S. Department of Labor Employment Standards Administration (Non)Compliance Monitoring What to look for and how to find it … (Davis-Bacon payrolls)

U.S. Department of Labor Employment Standards Administration Payroll reviews… Ensure all laborers and mechanics paid no less than required based on: Type of work performed Hours worked, including any overtime Monitoring for violations, not compliance

U.S. Department of Labor Employment Standards Administration Types of violations… Face of the record Inadvertent Easily resolved If early, not too costly Concealed (falsification) Willful Independent validation / investigation Bigger bucks / bigger impact

U.S. Department of Labor Employment Standards Administration Why DOL? Resources Trained investigators Broader scope of authority Potential for debarment Besides…. We’ve got something they don’t have

U.S. Department of Labor Employment Standards Administration Compliance Factors Type of work performed (classification) Number of hours worked (straight time and overtime) Wage rate for the classification Actual payment to the worker

U.S. Department of Labor Employment Standards Administration 47 Spot-Check Payrolls Review for major trades Detect patterns Compare on-site interviews Focus on falsification Ensure corrections, as needed

U.S. Department of Labor Employment Standards Administration 1 st things 1 st … Sort by employer / arrange by date Check the signature Check the data If not, require resubmission – never return payrolls for correction

U.S. Department of Labor Employment Standards Administration Next steps… Face of the record Work classifications / pay rates Hours Apprentices / trainees Require corrections if needed Restitution on correction certified payroll

U.S. Department of Labor Employment Standards Administration A closer look… Concealed violations Misclassification Reduced hours Deficient rates of pay Unauthorized deductions Kickbacks

U.S. Department of Labor Employment Standards Administration Payroll Falsification Indicators Payroll data are simple Patterns over time Anomalies / mistakes What’s false / what’s true?

U.S. Department of Labor Employment Standards Administration Ratio  1:1… Example: 10 Laborers : 2 Electricians

U.S. Department of Labor Employment Standards Administration Ratio  1:1? Misclassification Possible exceptions: Landscaping; cement; paving What is false / what may be true

U.S. Department of Labor Employment Standards Administration Too few / irregular hours… Examples: No 40 hour workweeks Crew doesn’t work together Hours reported in 10 th or 100 th fractions

U.S. Department of Labor Employment Standards Administration Too few / irregular hours? Reduction of hours / backing into hours Hours reduced to fit fabricated calculation Earnings ÷ WD rate = false hours What is false / what may be true

U.S. Department of Labor Employment Standards Administration No 40-hour workweeks… W/D:$20/hour Er pays:$10/hour Actual:40 hours x $10 = $400 $400 ÷ $20 = 20 hours P/R shows:20 Hours x $20 = $400

U.S. Department of Labor Employment Standards Administration Hours in 10ths / 100ths… W/D:$33.68/hour Er pays:$17.50/hour Actual:40 hours x $17.50 = $700 $700 ÷ $33.68 = 20.78(384…) hours P/R shows: hours x $33.68 = $700

U.S. Department of Labor Employment Standards Administration Computation discrepancies… Examples: Hours x rate of pay ≠ gross earned Round gross earned from uneven DB wage rates

U.S. Department of Labor Employment Standards Administration Computation discrepancies? Insufficient hourly rate / piece work Er disregards math to match gross earnings / net pay What is false / what may be true

U.S. Department of Labor Employment Standards Administration Math doesn’t work… W/D:$33.68/hour Er pays:$17.50/hour Actual:40 hours x $17.50 = $700 P/R shows:20 hours x $33.68 = $700 BUT:20 x $33.68 ≠ $ hours x $33.68 = $673.68

U.S. Department of Labor Employment Standards Administration Extraordinary deductions… Examples: Unidentified / disproportionate deductions Savings / other deduction ≥ take home pay

U.S. Department of Labor Employment Standards Administration Extraordinary deductions? Kickback Er takes “cut” from the back end What is false / what may be true

U.S. Department of Labor Employment Standards Administration Compliance excess… Employer submits unrequired / unrequested documents Employer submits employee “labor releases”

U.S. Department of Labor Employment Standards Administration Worker complaint… All manner of underpayment / falsification schemes Employer pays in cash Employer “cashes” pay checks “Ghost” employees

U.S. Department of Labor Employment Standards Administration 65 On-Site Interviews Validate / test payroll data (inspector’s observations / employee perspective) Develop complaints / substantiate suspected violations Target interviews Get a “good” story – focus on suspect activity

U.S. Department of Labor Employment Standards Administration Next steps… Validate suspected violations What happened / what do you need How much restitution / LDs Contact Federal funding agency / DOL? Request employee addresses / SSNs Send questionnaires (customize – what’s false/what’s true) Target on-site interviews

U.S. Department of Labor Employment Standards Administration More steps… Assess the data Estimate restitution / CWHSSA L/Ds Consider withholding

U.S. Department of Labor Employment Standards Administration Then what? Informal consultation Nature of the violations Scope of violations Send summary / documents Cooperate / ensure withholding Monitor for non-compliance

U.S. Department of Labor Employment Standards Administration At any point… Contact the Federal funding agency / DOL if: You have any questions Need assistance There is any suggestion that kickbacks are involved

U.S. Department of Labor Employment Standards Administration Resources… DOL Wage and Hour Division HUD Office of Labor Relations Wage Determinations On-Line

U.S. Department of Labor Wage and Hour Division CERTIFIED PAYROLLS ( Weekly Payrolls and Statements of Compliance ) 29 CFR 5.5(a)(3) and FAR

U.S. Department of Labor Wage and Hour Division Certified Payrolls  Certified payrolls include the following information: Name and worker’s classification Hourly rates of pay (including the rates of contributions or costs anticipated for bona fide fringe benefits, or cash equivalents paid for the benefits) Daily and weekly number of hours worked Deductions made Actual wages paid

U.S. Department of Labor Wage and Hour Division Certified Payrolls  Full social security numbers and home addresses of each worker shall not be included on the payroll records submitted to the agency  Instead, an individually identifying number for each employee should be used. The last four digits of the employee’s social security number are recommended  The prime contractor must maintain addresses and social security numbers for all workers and provide them, on request, to the contracting agency or WHD

U.S. Department of Labor Wage and Hour Division Certified Payrolls  Contractors must submit payroll records weekly for each week in which any contract work is performed within 7 calendar days of the payment date  The prime contractor is responsible for submission of payrolls by all subcontractors

U.S. Department of Labor Wage and Hour Division Certified Payrolls  Payroll Form 347 (For Contractors Optional Use) may be used for certified payroll records, but the required information can be submitted in any form desired  Each payroll report must contain a Statement of Compliance signed by the contractor or subcontractor, or its authorized agent, who pays or supervises the payment of the covered workers

U.S. Department of Labor Wage and Hour Division Certified Payrolls Federal agencies receiving the payroll reports and Statements of Compliance must retain them for three years from the date of the completion of the contract and produce them at the request of WHD at any time during the three year period Contract funds may be withheld for nonsubmission of certified payrolls (FAR (b)) Certified payroll reports are agency records as defined by the Freedom of Information Act (FOIA) (FAR (e))

U.S. Department of Labor Wage and Hour Division Certified Payrolls A response to a FOIA request for certified payroll information is a matter within the administrative jurisdiction of the federal agency holding the requested records, and should be made in compliance with the applicable terms and conditions of the FOIA The requirements of the FOIA include the obligation on the part of the agency to respond to requests for records within 20 days of receipt and advise the requesting party whether it will comply with the request and the reasons supporting the agency determination

U.S. Department of Labor Wage and Hour Division Certified Payrolls Certified payrolls may be submitted electronically with proper use of electronic signatures Electronic certified payrolls reduce processing and storage costs, assist in compliance monitoring, and expedite responses to FOIA requests Submitting certified payrolls by use of a fax machine does not satisfy the electronic signature requirement

U.S. Department of Labor Wage and Hour Division

U.S. Department of Labor Wage and Hour Division

U.S. Department of Labor Wage and Hour Division Wage Determinations Online - Instructions Completing WH WH-347 Blank Form Wage and Hour Division’s Davis-Bacon Act Page -

U.S. Department of Labor Wage and Hour Division Disclaimer  This presentation is intended as general information only and does not carry the force of legal opinion.  The Department of Labor is providing this information as a public service. This information and related materials are presented to give the public access to information on Department of Labor programs. You should be aware that, while we try to keep the information timely and accurate, there will often be a delay between official publications of the materials and the modification of these pages. Therefore, we make no express or implied guarantees. The Federal Register and the Code of Federal Regulations remain the official source for regulatory information published by the Department of Labor. We will make every effort to keep this information current and to correct errors brought to our attention

U.S. Department of Labor Wage and Hour Division Q & A